Credit report resellers settle charges over data breaches

1,800 reports exposed

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Three resellers of credit information have settled federal charges they didn't do enough to prevent security breaches that exposed sensitive consumer information to hackers.

The companies – Washington state-based ACRAnet Inc. and SettlementOne Credit Corporation and Statewide Credit Services of California – have agreed to obtain independent security audits every other year for the next two decades and develop comprehensive security programs designed to protect the confidentiality of the consumer data they sell. The companies buy credit reports from the three nationwide consumer reporting agencies and combine them into special reports used by mortgage brokers.

The companies collectively exposed more than 1,800 credit reports via compromised client networks, the US Federal Trade Commission said in a statement. Even after learning of the compromises, the companies failed to take reasonable steps to prevent future breaches, the FTC added.

SettlementOne, for instance, allowed “end users with unverified or inadequate security to access consumer reports” through the company's portal, according to a complaint (PDF) submitted in the case.

“As a direct result of these failures, between February and June 2008, hackers were able to exploit vulnerabilities in the computer networks of multiple SettlementOne end user clients, putting consumer reports in those networks at risk,” FTC officials wrote. “In multiple breaches, hackers accessed at least 784 consumer reports without authorization.”

The FTC alleged the shortcomings violated several federal laws, including the Fair Credit Reporting Act, the FTC Act, and the Gramm-Leach-Bliley Safeguards Rule. ®